3 - Ministry of Civil Aviation

oversight by the DGCA, in order to contain the monopoly power of airports and•‘,ATC services,, place these segments under the purview of an independent AviationEconomic Regulatory. Authority (Chapters 4,'5 and 6).(d) Establishment of an Essential Air Services Fund (EASF) to provide explicit subsidysupport to essential but uneconomical services including commercially unviableairports (Chapters 3, 4 and 5). Scope of essential services sought to be supportedshould be congruent with the quantum of funds available with the EASF. Trying todo "too much" with "too little" will undermine an otherwise laudable endeavour.The Committee believes that a concerted implementation of the above measures wouldgo a lopg way in lowering costs for the commercial and general aviation segments, therebymaking air transport more affordable and its use more widespread.7.2 Immediate Concerns and RemediesLiberal Fiscal Regime: The government should substantially lower excise duty andsales tax on ATF and abolish import duty and sales tax on AVGAS. Other aviation-related taxesand fees such as IATT, FATT and PSF may be replaced with a single, lower ad valorem sector- -specific cess, say at 5% of airfare, and the proceeds thereof may be ring-fenced into theproposed non-lapsable Essential Air Services Fund. In case of sales tax, the government mayconsider categorising ATF as "declared goods" under the Central Sales Tax Act so that sales taxon ATF does not exceed 4%. Furthermore, in case of smaller aircraft that are essentiallydeployed to enhance regional connectivity, government should do away with the existingdiscrimination based on the type of aircraft and, accordingly, bring parity in taxes on ATF forjets and turboprop aircraft with maximum certified seating capacity of less than 80.Lowering of Airport Charges: The Committee recommends that airport chargesshould be substantially brought down to levels comparable with neighbouring South East Asianand Gulf countries.Freedom to Source ATF: Private sector airlines should be allowed to source ATFfrom the supplier of their choice. In this regard, the Committee suggests that the AirportsAutl.ority of India (AAI) should offer to buy out the fuel supply hydrants and associatedinfrastructure of the government-owned oil companies and provide all oil companies equitableaccess to such facilities. Alternatively, the government-owned oil companies should be requiredto provide private oil companies access to these facilities based on 'a "common user/carrier"principle. In either case, given the potential for abuse of monopoly power, fuel supplyinfrastructure at airports should come under the purview of the proposed Aviation EconomicRegulatory Authority (AERA).Ensuring a Level Playing Field: With a view to ensuring a level playing fieldetween Indian Airlines and domestic private airlines, the Committee recommends the removalof restrictions on travel of government and PSU employees on private airlines. In addition,domestic private airlines should be allowed to operate international services and also bepermitted to offer third-party ground handling services. As regards greenfield airports, the50